Correlation Between General Electric and United Natural
Can any of the company-specific risk be diversified away by investing in both General Electric and United Natural at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining General Electric and United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Electric and United Natural Foods,, you can compare the effects of market volatilities on General Electric and United Natural and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in General Electric with a short position of United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Electric and United Natural.
Diversification Opportunities for General Electric and United Natural
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between General and United is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding General Electric and United Natural Foods, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods, and General Electric is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on General Electric are associated (or correlated) with United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods, has no effect on the direction of General Electric i.e., General Electric and United Natural go up and down completely randomly.
Pair Corralation between General Electric and United Natural
Assuming the 90 days trading horizon General Electric is expected to generate 2.4 times less return on investment than United Natural. But when comparing it to its historical volatility, General Electric is 1.95 times less risky than United Natural. It trades about 0.12 of its potential returns per unit of risk. United Natural Foods, is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,818 in United Natural Foods, on November 3, 2024 and sell it today you would earn a total of 1,469 from holding United Natural Foods, or generate 52.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 66.94% |
| Values | Daily Returns |
General Electric vs. United Natural Foods,
Performance |
| Timeline |
| General Electric |
| United Natural Foods, |
General Electric and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Electric and United Natural
The main advantage of trading using opposite General Electric and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Electric position performs unexpectedly, United Natural can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in United Natural will offset losses from the drop in United Natural's long position.| General Electric vs. Datadog, | General Electric vs. Burlington Stores, | General Electric vs. Molson Coors Beverage | General Electric vs. SK Telecom Co, |
| United Natural vs. Taiwan Semiconductor Manufacturing | United Natural vs. Apple Inc | United Natural vs. Alibaba Group Holding | United Natural vs. Microsoft |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |